01 March 2023 16:45, UTC
Studying time: ~8 m
Final Might, Grammy award-winning DJ Diplo grabbed headlines after a video confirmed him struggling to cross safety and get right into a yacht celebration held through the Cannes Movie Competition. Though meant to carry out on the non-public occasion, Diplo’s title wasn’t on the visitor checklist.
“Fortunately the proprietor was strolling by and let me in,” Diplo stated in an Instagram put up.
That “proprietor” was Roham Gharegozlou, CEO and co-founder of Dapper Labs. He rose to prominence together with the as soon as wildly widespread NFT assortment his firm created, NBA Prime Shot. Gharegozlou cast partnerships with a formidable checklist of stars like Michael Jordan, Will Smith, Ashton Kutcher and the Nationwide Basketball League. Dapper’s investor checklist was equally spectacular, with Andreessen Horowitz, Google Ventures and Samsung all giving the startup cash.
It solely took about three and a half years for Gharegozlou to information Dapper to a staggering $7.6 billion valuation, a lot of it realized throughout a bull run that noticed cryptocurrencies and NFT costs obtain report highs. However whereas Gharegozlou was usually celebrated within the media and enterprise communities, behind the scenes lots of his firm’s workers lived in concern of what they known as the CEO’s erratic nature. A number of workers additionally discovered the first-time CEO’s spendthrift methods imprudent, particularly when the NFT market started to bitter, Prime Shot gross sales plummeted and layoffs at Dapper turned frequent.
So when information unfold of the Diplo celebration Gharegozlou hosted on the French Riviera aboard a 184-foot yacht — which prices greater than $200,000 every week to constitution — it landed like a intestine punch for a number of Dapper workers frightened about their job safety amid the turbulent market situations.
Inside Dapper, a lot of the corporate was in turmoil. Senior chief exits have been changing into commonplace, and people workers left behind have been drained and annoyed. Moreover, in response to a number of former workers, the CEO’s frequent non-public jet journey, pursuit of movie star companions and spending on luxurious lodging, which at one level included a $85 million Beverly Hills mansion, had individuals questioning Gharegozlou’s priorities. The CEO’s fixed “bullying” and “public shaming” of workers solely added to the fireplace, serving to to stoke a poisonous firm tradition.
The Block spoke to eleven present and former workers for this story, together with each staffers who left of their very own volition and those that didn’t. A few of those that participated nonetheless personal fairness in Dapper.
Dapper Labs acknowledged in a written assertion that working at a startup will be hectic and that it has tried to create a protected and respectful office. “We worth every worker’s contributions to our enterprise and our communities, and we take their suggestions significantly,” stated an organization spokesperson. Gharegozlou did not reply to a request for remark.
A number of key traders together with Andreessen Horowitz did not reply to requests for remark.
Dapper CEO Roham Gharegozlou letting DJ Diplo right into a yacht celebration on the French Riviera. SOURCE: Diplo’s public Instagram account.
With a protracted bear market that has seen NFT buying and selling volumes plummet by greater than 90%, layoffs at bigger NFT outlets like Dapper have grow to be more and more frequent in latest months, placing strain on administration to chop prices and discover methods to navigate the downturn. Revelations of poor administration and cavalier CEO habits have additionally not too long ago grow to be a standard chorus the world over of crypto.
Dapper’s NBA Prime Shot assortment has seen buying and selling collapse, tumbling from a month-to-month sales-peak of $224 million in February 2021 to a mere $2.8 million final month, in response to CryptoSlam.
Final week Dapper laid off 20% of its full-time workers. 4 months earlier, it parted methods with 22% of its workers.
Described by many as charismatic and personable, Gharegozlou’s entrepreneurial roots seem to run deep. His father Reza moved the Gharegozlou household to Dubai from Tehran within the early Nineteen Nineties to start out a gasoline and refrigerants firm, in response to a profile within the Canadian enterprise publication Monetary Put up. Later, Roham Gharegozlou obtained a level from Stanford College and he and his brother Sam began a small enterprise capital agency known as Axiom Zen in 2012.
Then in 2017, Gharegozlou’s journey to grow to be an NFT pioneer started when Axiom Zen helped create CryptoKitties, a well-liked blockchain recreation the place individuals may purchase and promote digital cats. CryptoKitties, and its official creator Dapper Labs, spun off from Axiom Zen the following 12 months. Shortly thereafter, Dapper secured $15 million from a protracted line of main gamers in each finance and leisure together with Andreessen Horowitz, Jeffrey Katzenberg’s WndrCo and the founder and CEO of Reddit, Steve Huffman.
Gharegozlou and the Vancouver-based Dapper’s profitable streak continued in 2020 after the corporate partnered with the NBA to create NBA Prime Shot, a group of NFTs which might be video clips of particular basketball highlights that individuals should purchase, promote and commerce. The gathering caught fireplace within the first quarter of 2021, producing greater than $200 million in gross sales throughout two consecutive months. It additionally helped introduce NFTs to the mainstream.
And that’s when the large bucks began to roll in. In March 2021 Dapper raised $305 million in a funding spherical that included NBA legend Michael Jordan as nicely present all-star Kevin Durant. Together with prolific blockchain investor Andreessen Horowitz, dozens extra enterprise capitalists, NBA and Nationwide Soccer League gamers invested within the spherical. Later that 12 months, as NFT buying and selling volumes have been hitting all-time highs, Dapper raised one other $250 million, giving the roughly three-year-old firm a valuation of $7.6 billion, in response to TechCrunch.
‘Roped in by the highlife’
Positioned as a trailblazer, Gharegozlou’s accomplishments have been featured in premier enterprise publications like The Wall Road Journal, Forbes, Fortune and Quick Firm. The chief’s fame had ascended together with Dapper’s hovering valuation.
Round this time is when Gharegozlou’s habits is alleged to have began to alter, in response to two former workers that labored carefully with the CEO for years.
With NBA Prime Shot producing buzz, Gharegozlou began receiving calls from well-known entrepreneur celebrities and prime CEOs, stated one particular person conversant in the matter. Two individuals stated he may land a gathering with virtually anybody he needed.
Gharegozlou’s way of life additionally developed dramatically. The CEO started to fly steadily on non-public jets, in response to 5 individuals conversant in the matter. The mode of journey turned certainly one of his priciest expenditures because the journeys would usually value between $60,000 and $100,000 per flight, one particular person stated.
Whereas on the bottom, Gharegozlou routinely rented mansions each time he traveled, together with as soon as renting a 12-bedroom, $85 million mansion in Beverly Hills that may value $300,000 a month, in response to three individuals. When not renting a mansion, the CEO usually booked five-star lodge suites that might typically value as a lot as $30,000 an evening, in response to one particular person conversant in the matter.
The $85 million Beverly Hills mansion Gharegozlou is alleged to have rented. Non-public jet journey and luxurious lodging have been usually marked down as “advertising” bills. PHOTO SOURCE: Zillow
As Gharegozlou thought of the big-ticket bills integral to his technique of cozying as much as celebrities, they have been usually listed as “advertising” bills, one particular person stated.
“He completely obtained roped in by the excessive life,” stated a former worker that labored carefully with Gharegozlou for years.
4 former workers who labored carefully with the CEO stated even because the bear market set in, Gharegozlou gave the impression to be extra involved with producing hype through movie star partnerships than he did constructing new merchandise or discovering builders to make the most of Dapper’s blockchain, Move. Additionally, the movie star partnerships, whereas making for flashy press releases, usually didn’t create tangible worth for the corporate, three of these individuals stated.
Dapper additionally steadily sponsored extravagant occasions, in response to three individuals with data of the technique. The corporate’s Move blockchain formally sponsored a February 2022 New York Trend Week bash held in Los Angeles. Musical superstars Justin Bieber and Drake carried out, and the celebration boasted a visitor checklist that included Kendall Jenner and Leonardo DiCaprio, in response to a report in Vogue on the time.
Dapper stated in a press release that “the notion that there was extreme spending” not tied to the corporate’s technique is “inaccurate and deceptive.” The corporate additionally stated the CEO personally funded some occasions. “Our enterprise is rooted in leisure and sports activities,” the assertion additionally stated. “We’ve got and can proceed to spend cash on high-impact occasions.”
Regardless, oversight of the CEO’s spending might have been missing as throughout a lot of the corporate’s existence three-fifths of the corporate’s board has included Gharegozlou, his brother Sam and a school pal, stated one particular person conversant in the matter.
As Dapper shortly turned a multi-billion greenback darling, a minimum of on paper, the corporate expanded its headcount exponentially. Its workers swelled to about 600 from 100 in lower than two years. However Gharegozlou struggled to delegate or relinquish management of even minor particulars, in response to most of the former workers who stated the CEO was keen to participate in each doable choice, to the purpose of micromanaging, they stated.
As the present crypto winter emerged, Gharegozlou’s mercurial nature worsened, in response to every of the individuals The Block spoke to. It turned more and more frequent for Dapper’s workers to both give up or be fired because the poisonous work tradition spiraled uncontrolled, the individuals additionally stated.
NBA Prime Shot month-to-month buying and selling volumes declining in 2022 as bear market units in. SOURCE: CryptoSlam!
All through a lot of 2022, it was frequent for newly employed senior workers to final just a few months as they’d both give up after struggling underneath Gharegozlou’s management or have been fired, stated 5 individuals conversant in the matter. The excessive turnover fostered a tense work atmosphere the place individuals have been scared of crossing the CEO, in response to everybody The Block spoke to.
Staff’ anxieties have been additionally exacerbated by a tradition of “bullying” spurred on by Gharegozlou’s propensity for publicly shaming workers on Slack or screaming at workers throughout video calls, most of the individuals stated. Staff opting to take mental-health breaks turned commonplace, the individuals stated.
In a doc obtained by The Block, which introduced Dapper was laying 20% of its workers, Gharegozlou instructed traders he aimed to enhance effectivity and that the corporate is in a “sturdy money place with no excellent debt.”
Dapper additionally now finds itself within the midst of a courtroom battle to find out whether or not the corporate violated securities legal guidelines by promoting NBA Prime Shot Moments NFTs with out the usual registration and disclosures which is utilized to different funding contracts.
In final week’s memo to traders, Gharegozlou waxed optimistic, saying Dapper is “tremendously enthusiastic about a number of main launches arising this 12 months, and extra assured than ever that web3 will remake digital life for the higher, for billions of individuals over time.”